LG ELECTRONICS SUSTAINABILITY REPORT

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1 LG ELECTRONICS SUSTAINABILITY REPORT Materiality Report BOUNDARY Internal Stakeholders External Stakeholders Suppliers Communities Investors Employees Subsidiaries WHAT IS IMPORTANT? NGOs Customers Group Affiliates Our 2015 materiality analysis identified the followings as the most important issues: 1) Expanding Social Contribution Programs 2) Helping Communities Achieve Sustainable Economic Growth 3) Engagement and Collaboration with Governments, NGOs, International Organizations and Communities Our stakeholders also found Developing Products and Services for the Poor to have a high importance. Governments International Organizations HOW WE MANAGE IT? Our Approach LG Electronics strives to empower communities with programs that address major social issues and contribute to the longer-term development of communities with a wide range of initiatives that reflect the spirit conveyed in our slogan, technology that cares, partnerships built on trust, and sharing that engages all. Our Evaluation As part of our ongoing efforts to enhance the positive impact of our social contribution programs, LG Electronics assesses the impact of our social contribution initiatives on its business operations and the society and incorporates the results into our initiatives to ensure that our objectives and social values are aligned and advance in the same direction. Future Direction 1) Develop products and technologies that address local issues 2) Provide education and training opportunities to the socially disenfranchised from emerging markets and developing countries 3) Expand employee participation in volunteering and charitable giving Our Performance 48 countries 89 business locations 90,000 employees Participation in Social Contribution Initiatives Stakeholder Statement KOICA as a leading grant aid agency of Korea has made efforts to implement development cooperation projects by mobilizing the private sector expertise and knowledge to achieve the SDGs. LG-KOICA Technical Vocational Education and Training (TVET) College in Ethiopia is a project linked to one of the four initiatives*, "Better Education for Africa Rise." This project is considered a best practice for realizing the concept of inclusive business creating shared value (CSV), operating a vocational institute specialized in electronics repair by combining the core business competency of LG Electronics and expertise in development cooperation of KOICA. I sincerely look forward to creating synergy with LG Electronics through close cooperation and achieving the SDGs together. In Shik Kim Korea International Cooperation Agency (KOICA) President 85teams Life's Good Volunteers 3 countries 26ssesions Health Promotion Campaign in Asia * Better Life for Girls, Safe Life for All, Science, Technology and Innovation for Better Life, and Better Education for Arica Rise.

2 OVERVIEW STAKEHOLDER COMMUNICATION MATERIALITY REPORT APPENDIX 71 Our Principles and Achievements FOCUS Background In September 2015, at the United Nations, 193 world leaders adopted the Sustainable Development Goals (SDGs) as a global commitment for the sustainable development of the humanity. Expected to serve as a roadmap to sustainable development by 2030, the future development framework is comprised of 17 goals and 169 targets covering a broad range of economic, social and environmental issues, and places a particular emphasis on the role of civil society including the private sector as well as expanded partnerships between stakeholders in achieving these ambitious goals. LG Electronics and SDGs LG Electronics carefully studied the Sustainable Development Goals and associated targets and assessed their relevance to our own goals and targets for CSR initiatives, taking into account overall management conditions such as the nature and purpose of our business, and future opportunities and risks. As a result, we were able to identify nine Sustainable Development Goals that have a considerable relevance to our goals, businesses, and core competencies, and prioritized the goals to strategize our actions. LG Electronics plans to focus our energy and resources on the SDGs that are highly relevant to our own businesses and core competencies, and support the valuable causes with a renewed commitment. First Priority Our Principles for Social Contribution In order to honor the intent and purpose of the Sustainable Development Goals, LG Electronics reexamined and reestablished the principles that govern our social contribution efforts through intense discussions with our key stakeholders and Goal 3 Ensure healthy lives and promote well-be- Goal 7 Ensure access to affordable, reliable, Goal 8 Promote inclusive and sustainable economic Goal 11 Promote inclusive and sustainable Goal 12 Ensure sustainable consumption and management. Following these new guidelines, we will work towards expanding the impact and range of our contribution in addressing social issues, and, ing for all at all ages sustainable and modern energy for all growth, employment and decent work for all economic growth, employment and decent work for all production patterns in the longer term, affecting positive and enduring changes in our communities. Going forward, LG Second Priority Electronics will strive for technology that cares, partnerships built on trust, and sharing that engages all" in order to contribute to improving the quality of life across the world. Our 2015 Achievements and Assessment Goal 4 Goal 6 Goal 9 Goal 13 Goal 16 Throughout the year 2015, LG Electronics engaged in a broad range of initiatives to empower communities in which we operate. More than 90,000 employees (cumulative) actively involved themselves Ensure inclusive and quality education for all and promote lifelong learning Ensure access to water and sanitation for all Build resilient infrastructure, promote sustainable industrialization and foster innovation Take urgent action to combat climate change and its impacts Promote just, peaceful and inclusive societies in a range of social contribution initiatives at 89 different LG Electronics locations across 48 countries. LG Electronics also made a total of KRW 40.1 billion in social investment (consolidated, direct donations by the parent company and social investment budgets at subsidiaries), of which KRW 14.5 Social Investment in 2015 (Unit: % / Consolidated) billion was administered by the parent company for charitable donations. Category Area Our Social Investment in 2015 In 2015, 91 percent of our social investment budget was expended for community initiatives, with 8.8 percent and 0.2 percent being administered in charitable causes and cause-based CSR marketing programs, respectively (consolidated). A 18 percent Charity 8.8 Marketing 0.2 Education 4 Social Welfare 6 Environmental Protection 10 Other 3 increase in community initiatives is attributed to change in our accounting approach towards consol- Arts, Culture and Sports idation, which caused big-ticket items (sponsorship programs for the arts, culture and sports, etc.) to be included in the category. Sponsorship programs Community 91 Win-Win Growth 31 46

3 LG ELECTRONICS SUSTAINABILITY REPORT Materiality Report for the arts, culture and sports accounted for 46 percent of our social investment, while 31 percent went to win-win growth initiatives. Programs for environmental protection, social welfare and education accounted for, respectively, 10 percent, 6 percent, and 4 percent of the total investment. Life s Good with LG Background Every year, LG Electronics assesses the impact of individual social contribution initiatives on its business operations and the society with our own detailed checklist, and incorporates the results into our initiatives for the following year. In addition to the regular assessment, in 2015 we conducted expert group interviews and surveys to collect stakeholder feedback, and established the principles that govern our social contribution efforts. Cooperating toward a Better Life for All LG Electronics vision for social contribution, conveys our belief that empathy in our thoughts and consideration in our actions are building a better life for all in the human society. As a responsible corporate citizen, LG Electronics also supports the United Nations Sustainable Development Goals and what these goals set out to achieve for the humanity. In support of the valuable cause, we established three strategic directions for social contribution initiatives. First, we will deliver differentiated value to those who need our products and technologies. To this end, we are developing and distributing products and technologies that help address social and environmental issues in our communities. Second, we value opinions from each of our stakeholders, and will make every effort to engage and collaborate with our stakeholders through diverse channels, incorporating the outcome into our business operations. Third, each and every member of our organization will continuously explore the ways in which we could help our neighbors in need and build a better life together, and volunteer our time, effort, and expertise to create a community where everyone feels respected and valued. Future Direction LG Electronics plans to carefully monitor and assess our social contribution programs over the next three years in order to rebuild our programs by aligning our objectives and social expectations, and to report the progress in our sustainability report. Through this process, we will create social contribution programs that integrate our goals and stakeholder expectations, including those from our customers. FOCUS Survey on Our Social Contribution Initiatives PERIOD Conducted between October 10 to 20, 2015 Through which channel did you become aware of LG Electronics social contribution efforts? TARGET Conducted on 120 internal and external stakeholders LG Electronics Sustainability Report 55% (based on the number of responses) Media 55% RESULT All respondents selected up to three multiple response options Direct Participation LG Electronics Corporate Website 22% 32% Social Contribution Framework Which image do you have about LG Electronics social contribution programs? Caring 70% Charitable 50% Loving 32% In which area do you think LG Electronics can make the most impact? Sustainable Consumption and Production 70% Support for Vocational Training and Social Infrastructure Poverty Eradication Education 32% 32% 35% Which is the best way for LG Electronics to make a contribution? Leveraging Products and Technologies 85% Employee Participation 58% Providing Support in International Efforts 35%

4 OVERVIEW STAKEHOLDER COMMUNICATION MATERIALITY REPORT APPENDIX 73 Social Contribution Programs Technology that Cares LG Electronics strives to create differentiated value for those who need our products and technologies to build a better life for themselves and their neighbors. As a global corporation with business operations throughout the world, LG Electronics strives to help communities and engage community members by developing and distributing products and technologies that address local issues, including social and environmental concerns, while developing education programs that ensure the sustainability of our collective achievements. In Asia and Africa, emerging markets with high potential for growth, we implement initiatives that address the specific needs of each community, such as operating vocational schools, developing and distributing accessibility apps for the disabled, and building a solar-powered library. We will expand inter-departmental collaboration (product planning, marketing, service, etc.) to create technology that cares and build a better life for our neighbors. LG Hope Community in Ethiopia In 2012, LG Electronics teamed up with LG Corp. and World Together to launch the LG Hope Community to help low income families in Ethiopia achieve sustainable livelihoods. LG Hope Village, the first program of the LG Hope Community initiative, helps farmers achieve sustainable livelihoods with training on farming techniques and income generation initiatives for community members. In 2015 alone, we trained a total of 60 community leaders in farming and animal husbandry, and introduced cash crops that perform well in local soil and climate conditions, such as garlic and beetroot, to the local farming community. The program also provided 23 families with micro credit to setup a small-scale chicken farm. Another program from the LG Hope Community initiative is LG-KOICA Hope TVET College, which was established in 2014 to provide vocational training to young Ethiopians. As of March 2016, more than 130 students were enrolled in the school s electronics and ICT device repair courses and working hard to become professional repair technicians. In order to provide the best possible learning experience, we dispatched our Master Repair Engineers to the school to lead two advanced sessions, and organized a student field trip to our Dubai service location. Students are responding enthusiastically to our efforts, performing exceptionally well in the national certification test: 98 percent of our graduates acquired the Level I (entry) certification, with 98 percent of them successfully advancing to Level II (intermediate) certification (as of the end of 2015) SOCIAL CONTRIBUTION PROGRAMS: TECHNOLOGY THAT CARES 01: Health-Hygiene Awareness Class in Ethiopia 02: Health Promotion Campaign in Myanmar 03: Health Promotion Campaign in Cambodia 04: AT EDUCOM in UAE 05: OLED Perfect Black Gallery In addition, LG Electronics is working with the International Vaccine Institute (IVI) to protect the people of Ethiopia against AWD (Acute Watery Diarrhea), administering cholera vaccines to more than 40,000 people and conducting health-hygiene awareness classes for over 60,000 schoolchildren. Our employees are also contributing to a scholarship program for the descendants of Korean War veterans. Thus far, a total of 146 students have benefited from the scholarship program, which is operated with contributions from LG Group employees (LG Electronics, LG Corp., LG Chem, LG Display, and LG Uplus). Public Health Promotion Campaigns in Asia LG Electronics first launched a health Promotion campaign in 2013 for medically underserved people in Myanmar, and expanded the program to include Bangladesh and Cambodia in Through this program, LG Electronics visits medically underserved communities and provides free medical service as well as health-hygiene awareness classes that cover various health issues, such as hypertension, diabetes, nutrition, and personal hygiene. We also organize small cultural events for community members visiting the campaign venue, such as a photo session with the LG Pocket Photo printer and 3D movie screenings, turning the health awareness campaign into a neighborhood festival. In the year 2015, LG Electronics organized 26 health awareness campaign sessions in the three countries to provide free medical service and medical supplies to over 40,000 individuals and hosted health-hygiene awareness classes and cultural events for more than 51,000 people. Addressing Community Issues In 2015, LG Electronics engaged in social contribution programs that take advantage of technology that cares in addressing local issues. For instance, LG Electronics partnered with World Vision to enhance the learning environment for public school students in Pakistan, which suffers from power supply problems, and built solar-powered libraries leveraging our solar power technology. As part of our efforts to create a better world for people with disabilities, we cooperated with Seoul National University s QoLT Center in the UAE to raise awareness on accessibility for the disabled and to offer accessibility app development training (AT EDUCOM) to the country s college students. In France, LG Electronics set up and ran the OLED Perfect Black Gallery during the 2015 United Nations Climate Change Conference (COP 21) in Paris in order to highlight the enduring legacy and beauty of World Cultural Heritage sites with the OLED TV s superb picture quality.

5 LG ELECTRONICS SUSTAINABILITY REPORT Materiality Report Trustworthy Partner As a responsible member of communities where we operate, LG Electronics actively engages with stakeholders to identify local needs and incorporates their opinions into our social contribution initiatives. We also pursue partnerships with national and local governments to gain insight into local conditions, while expanding the impact of our social contribution initiatives through collaboration with organizations that have expertise in addressing local issues, including International Organizations and NGOs. Based on the partnerships and mutual respect with stakeholders, LG Electronics will further our efforts to turn our CSR vision into reality, conveyed in the slogan Life s Good with LG, in communities across the world. LG Social Fund: Support for Social Economy Organizations in the Environment Sector Since 2011, LG Electronics has operated the LG Social Fund to promote social economy organizations in the environmental protection and management sector, as part of our boarder commitment to advancing the Korean economy. Managed in partnership with LG Chem, the Ministry of Employment and Labor, the Ministry of Environment and NGOs, the LG Social Fund is a multilateral partnership for social economy. The program selects social economy organizations with innovative green economy ideas and provides a wide range of support, such as financing, management consulting, promotions and office space, with a total of 91 organizations receiving support since its inception. In 2014, we also launched the Social Economy Promotion Contest for college and graduate students and recognize excellent ideas with an award. Since 2015, the program has offered free office and collaboration space to social economy organizations at the LG Social Campus located in the Industry-Academia Cooperation Center at Korea University. Emergency Relief After a 7.8 magnitude earthquake struck Nepal in April 2015, LG Electronics, together with our local buyer Chaudhary Group, built and donated 100 prefab housing units to victims of the disaster. We also donated 500 mobile phones to the Nepal Scouts through the United Nations Office for the Coordination of Humanitarian Affairs (UN OCHA) to assist their relief efforts, and dispatched repair engineers to offer free repair service to earthquake victims. In Myanmar, we donated medical supplies to more than 820 families affected by the floods that hit the country in August 2015, and provided support for the nation s relief efforts through the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) SOCIAL CONTRIBUTION PROGRAMS: PARTNERSHIPS BUILT ON TRUST 01,02: LG Social Fund 03,04: Emergency Relief in Nepal 05: Love Genie 06: LG Hope Screen Collegiate CSR Academy, Love Genie In 2014, LG Electronics launched Love Genie, the collegiate CSR Academy, to foster CSR experts and promote social responsibility among college students future leaders of our society. In 2015, the Academy welcomed 30 college students and offered systematic training and mentoring on CSR issues such as labor, human rights, ethics, the environment, health & safety and social contribution. We also supported the students to independently plan and execute CSR projects, including initiatives for resolving waste management and poverty issues. Additionally, we also help our graduates find a career opportunity in CSR or social contribution organizations at business corporations or in NGOs and other social organizations. More information on Love Genie or initiatives led by Love Genie members is available on their official blog ( co.kr). LG Hope Screen Since 2011, LG Electronics has made our marketing assets available to international organizations and NGOs as part of our efforts to raise public awareness on social responsibility and encourage members of the public to do their part in resolving social issues. In 2015, we offered our Times Square, New York City digital billboard to the UNEP and UN to feature campaign videos for World Environment Day and International Youth Day, and contributed to heightening public awareness on these important causes. Participation in UN Global Compact Projects In 2014, LG Electronics agreed on an MOU with the United Nations Global Compact and participated in a research project for Private Sustainability Finance. We also took part in the Poverty Footprint Initiative led by Oxfam and Unilever to develop a methodology for assessing and measuring the impact businesses have on sustainable development. Sharing and Comfort (Sharing that Engages All) Our employees are actively involved in LG Electronics social contribution efforts, volunteering their time and talents for causes that help their communities. Guided by the Charter of Social Contribution established in 2005 and the LG Social Contribution Policy introduced in 2012 by LG Corp., we strive

6 OVERVIEW STAKEHOLDER COMMUNICATION MATERIALITY REPORT APPENDIX 75 to create a corporate culture that promotes voluntary participation in social contribution efforts and empathy in actions. We also continuously provide corporate-level policy support to initiatives undertaken as part of LG Electronics Labor Union s Social Responsibility (USR), which was instituted in 2013 as the world s first CSR pledge by a labor union, to promote employee participation in giving and volunteering at every business site and create more opportunities for talented employees to share their professional knowledge and expertise in helping their neighbors in need. Employee Volunteer Programs In addition to volunteering their time, employees at LG Electronics apply their personal hobbies, special skills, and professional expertise in helping their neighbors in need and addressing community issues, including pro-bono work for non-profit organizations. Our employee volunteer groups, organized in 2005 by our employees on their own initiative, have played the central role in our employee social contribution efforts across communities. In 2010, we officially launched the Life's Good Volunteers" as an employee talent donation program. Throughout 2015, 760 employees from 85 volunteer groups participated in a wide range of volunteer projects, such as photographing portraits for the elderly, running science classes for children, and providing free electronics repair service to welfare facilities. In addition, employees with professional expertise came together and formed the Life s Good Volunteer's Pro to provide pro-bono work for non-profit organizations, which require professional services in their operations, but are unable to obtain such services due to financial or other reasons. The group members put into use their professional expertise to support valuable causes championed by non-profit organizations by designing their logos, translating professional literature, and developing smart phone apps. Donation Programs More than 95 percent of LG Electronics Korea employees are contributing to the Salary Round Up Fund, which is raised by employees who pledge approximately KRW 1,000 from their monthly salaries to help low income families. Over 82 percent of LG Electronics Korea Executives are also participating in the Executive Contribution Fund, founded in 2004 in order to support social contribution initiatives that leverage our technologies and core competencies in addressing social issues. In 2015, the fund was used for empowering communities across the world, and supported the health promotion campaign in South East Asia, accessibility app development training in the UAE, earthquake relief SOCIAL CONTRIBUTION PROGRAMS SHARING THAT ENGAGES ALL 01: Life s Good Volunteers 02: Workday Volunteer Program 03: Social Contribution with Love Genie (Korea) 04: World Environment Day (China) 05: World Environment Day (Greece) 06: Global Blood Donation Week (Russia) efforts in Nepal, and construction of a solar-powered library for school children in Pakistan. Since 2011, we have also hosted the Life s Good Day event at company cafeterias on a bimonthly basis. On these special days, company cafeterias offer a simpler menu at a reduced price, and employees who choose that menu pay the original price and donate the difference. In 2015, all proceeds from the Life s Good Day events were directed to employee initiatives that combine charitable giving and volunteering, such as packing and delivering food and gift bags for flophouse residents, and assisting the operations of food kitchens. Over the past five years, a total of 308,787 employees (cumulative) have participated in the events and raised approximately KRW 130 million. Global Employee Engagement As part of our efforts to promote employee participation in social contribution initiatives both in Korea and overseas, LG Electronics organizes global scale volunteer events on a semiannual basis. In celebration of World Environment Day (June 5), we have organized the Global Volunteer Day event since 2010 across the world in conjunction with the Labor Union s USR initiatives. In 2015, employees from 28 business sites in Korea and overseas (including the U.S., China, and Mexico) organized events in line with the year s theme, Seven Billion Dreams. One Planet. Consume with Care. We also host the annual Global Blood Donation Week in September to raise employee awareness on the importance of donating blood. In 2015, over 3,500 employees from 35 business sites in Korea and overseas participated and gave blood. LG Electronics Russia took the blood donation campaign on the road and toured the country, switching the modes of transportation from buses to rail and airplane. The campaign broke the Russian record for the longest distance covered by a campaign and was listed by the Guinness World Records Russia. In conjunction with the global event, we ran an SNS campaign in Korea, pledging KRW 1,000 for each message of support posted on social media sites. The fund raised through the campaign was used for treating pediatric cancer patients, and LG Electronics also donated 83 LG Kids Pad tablet PCs for the young patients.

7 LG ELECTRONICS SUSTAINABILITY REPORT Materiality Report Around the World BRAZIL (Paraisopolis CSR Project) In celebration of LG Electronics 20 years in Brazil, LG Electronics engaged in social contribution activities in Paraisopolis, one of Sao Paulo s poorest communities. We donated uniforms to more than 300 members from a local children s football club and provided funding for a neighborhood orchestra and ballet troupe whose members are comprised of local children and residents. BENELUX REGION (Capture Optimism) In the Benelux region, LG Electronics ran Capture Optimism, a photo project that searches for hope that withstands challenges and tough environments. Ten amateur photographers selected by the program traveled to remote areas around the world with the LG G4 smart phone and captured the images of people who find hope and positive answers despite the challenges they might face. Select images from the project were featured on the program's website and auctioned off for donations. KAZAKHSTAN (LG Care) As part of our efforts to create a community where everyone is treated with consideration and kindness, we created a website where customers can share their experience of receiving such warmth and care. The heartwarming stories posted by our customers were shared across social media accounts, and the kind individual in the story that received the most number of "like" votes was selected as the winner and received an LG product voucher as a gift. BRAZIL 1 SYRIA (LG Quiz Show) As part of our efforts to be part of Syria is in Our Hearts and send a message of hope to Syrians suffering from the nation's civil war. LG Electronics hosted a scholarship quiz contest and awarded a college scholarship to the final winner.

8 OVERVIEW STAKEHOLDER COMMUNICATION MATERIALITY REPORT APPENDIX 77 In order to turn our CSR Slogan Life s Good with LG into reality, LG Electronics puts great energy into social contribution efforts that empower communities in which we operate. In 2015, more than 90,000 employees from 89 business sites in 48 countries volunteered for our social contribution initiatives, including the programs presented below. TAIWAN (Life s Good with Hope, Dare to Dream) In Taiwan, LG Electronics teamed up with ten college students to run a project that helps children s dreams come true. The project toured ten schools in the country s rural region with the student volunteers and listened to the children talk about their dreams, capturing the interview on video. We posted their stories online and encouraged the public to help the children realize their dreams through online voting. CHINA (Happy Summer Break with LG) LG Electronics and LG Group affiliates in China partnered with the China Next Generation Education Foundation and ran the Happy Summer Break program, under which 1,000 college students from farming areas visit their hometowns during summer break and participate in projects that address local issues, such as delivering gifts to 3,000 children of migrant workers across the regions. BENELUX REGION KAZAKHSTAN CHINA 1 1 SYRIA TAIWAN 1 KOREA KOREA (LG IT Angels) Founded by employees from the MC Company, LG IT Angels is a volunteer group that strives to enhance access to IT products and services for the disabled. For more than 13 years, members of LG IT Angels have visited severely disabled people or disabled people from multicultural families at their homes and provided one-on-one tutoring on how to use PCs and smartphones. The volunteer group also sponsored the IT Contest for Persons with Disabilities, which provides computer-savvy individuals with disabilities an opportunity to showcase their computing skills. KOREA (Dreams on T-shirts) Since 2013, designers from the Corporate Design Center have put their artistic sensibilities and skills to good use for charitable causes. This year, the designers created family photo albums for single parent families and helped them preserve their precious memories. They also presented the children with T-shirts after drawing a picture picked by the children on the T-shirt.